First Amendment to Development Agreement
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Lincoln Property Company
First Amendment to Development Agreement
WHEN RECORDED RETURN TO:
City Clerk’s Office
City of Chandler
MS 606
P. O. Box 4008
Chandler, Arizona 85244-4008
FIRST AMENDMENT TO DEVELOPMENT AGREEMENT
FOR DEVELOPMENT OF PROPERTY LOCATED AT THE NORTHWEST CORNER
OF FRYE ROAD AND ELLIS STREET
DATE:
October __, 2025
PARTIES:
City of Chandler
an Arizona municipal corporation
Mail Stop 602
P.O. Box 4008
Chandler, Arizona 85244-4008
("City")
2500 West Frye Road Owner, LLC, an affiliate of
Lincoln Property Company Commercial LLC, a Texas LLC
Attn: David Krumwiede
3131 E. Camelback Road, #318
Phoenix AZ 85016
and
Lincoln Property Company Commercial LLC, a Texas LLC
Attn: Ryan Sullivan
8111 Douglas Avenue, Suite 600
Dallas, TX 75225
("Developer")
This First Amendment to Development Agreement (the "First Amendment") made
effective as provided in Section 7 below and is entered into by and between City and
Developer and Developer’s permitted assigns, as identified above (collectively, the
“Parties”).
RECITALS:
A.
On or about September 9, 2024, City and CPUS West Frye Road, LP (the
“Current Owner”) entered into that certain development agreement recorded in its entirety
in the Official Records of Maricopa County, Arizona as document number 20240483240,
Lincoln Property Company
First Amendment to Development Agreement
addressing the development of the Existing Data Center, the Data Center Expansion,
Equipment Yards, and other items (the “Development Agreement”).
B.
Developer is under contract to purchase the Property and, by no later than
October 30, 2025, Developer is to close escrow completing its purchase and thereby
becoming the fee title owner of the Property (“COE”).
C. It is currently unknown when and/or how much additional electricity the Salt
River Project (“SRP”) will be able to provide to the Property for operation of the proposed
Data Center Expansion building; therefore, the Parties agree construction and equipping
of the Data Center Expansion building is currently undetermined and may be phased as
provided in Sections 3(a.) and 3(c.) below.
D.
In order to complete its COE, Developer needs this First Amendment to be
approved by the City’s City Council, fully executed by the Parties and deposited in trust
with Kensington Vanguard National Title, Attention: Allen Brown, Executive Vice
President (“Title Company”) along with the Parties’ mutual instruction to Title Company
that (i) this First Amendment shall not be recorded unless and until Developer’s COE is
completed whereby Developer is the fee title owner of the Property and (ii) this First
Amendment shall be recorded immediately upon recordation of the deed conveying the
Property to Developer.
E.
Developer has requested that City revise and make changes in connection
with the terms of the Development Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
promises contained herein, and for the purposes set forth in the foregoing recitals which
are incorporated herein by reference, the Parties covenant and agree as follows:
1.
Recitals. The Recitals set forth above are acknowledged by the Parties to
be true and correct and are incorporated herein by this reference.
2.
Representations and Warranties. By signing this First Amendment to
Development Agreement:
a.
City represents and warrants to Developer that: (i) City is authorized
and empowered to enter into this First Amendment; and (ii) City has had a full and
complete opportunity to review and examine this First Amendment.
b.
Developer represents and warrants that it: (i) has an interest in
acquiring the real Property, and immediately prior to and upon recordation of this First
Amendment, will be the owner of record of the real Property, (ii) is authorized and
empowered to enter into this First Amendment; and (iii) has had a full and complete
opportunity to review and examine this First Amendment.
3.
Modification of Development Agreement. The terms of the Development
Lincoln Property Company
First Amendment to Development Agreement
Agreement are modified as follows:
a. Section 2.1 is amended to provide: The Data Center Expansion may not
incorporate or use any Water-Based Cooling Systems and no Water-Based Cooling
Systems may be added to the operation of the Existing Data Center. Moreover, each
existing Water-Based Cooling System within the Existing Data Center may only be
replaced with Mechanical Cooling Systems that do not rely on evaporative cooling. In
addition to the foregoing, all Water-Based Cooling Systems operating at the Existing Data
Center must be removed or replaced with Mechanical Cooling Systems before the City
will issue a temporary certificate of occupancy for the Data Center Expansion. Developer
understands that time is of the essence for removal of the Water-Based Cooling Systems
on the Property pursuant to this Agreement. Consistent with Recital C, Section 2.8, and
to address the phasing of the Data Center Expansion, the City agrees to issue a
temporary certificate of occupancy for each phase of the Data Center Expansion for a
term not to exceed twelve (12) months from the date of issuance. A temporary certificate
of occupancy for each phase of the Data Center Expansion may be renewed by the
Development Services Director in the Director’s sole discretion for additional terms not to
exceed twelve (12) months subject to the Director’s receipt of a certification from SRP for
each renewal that SRP is unable to deliver sufficient energy through permanent
infrastructure and facilities for the respective phase of the Data Center Expansion.
Provided, however, the Director may not renew a temporary certificate of occupancy for
each phase more than twice and the total term for a temporary certificate of occupancy
for each phase must not exceed three (3) years from the Effective Date of this First
Amendment. After three (3) years from the Effective Date of this First Amendment, the
Director may issue and renew a temporary certificate of occupancy for each phase in the
Director’s sole discretion. Further, in no event may a final certificate of occupancy be
issued for the Property if the Water-Based Cooling Systems have not been fully removed,
regardless of circumstances that may arise that are outside the control of Developer.
Upon issuance of the final certificate of occupancy for the Data Center Expansion and
during the remaining Term of this Agreement, Developer may not use any Water-Based
Cooling Systems within the Property.
b. Section 2 is amended to provide an additional Section 2.7: To help facilitate
converting the Existing Data Center from the existing Water-Based Cooling Systems to
Mechanical Cooling Systems, Developer may elect in its sole discretion to construct and
equip what are labeled Proposed Equipment Yards 1 and 2 on attached Exhibit 1 prior to
construction of the Data Center Expansion. If Developer makes such election then
Developer agrees completion and equipping of Proposed Equipment Yards 1 and 2, shall
be completed no later than 3 years after the effective date of this First Amendment and
the newly installed Mechanical Cooling Systems shall be used to cool the Existing Data
Center and all equipment therein. Further, if Developer makes such election and
proceeds to completion and equipping of the Proposed Equipment Yards, then Developer
also agrees that the existing Water-Based Cooling Systems in the Existing Data Center
shall be decommissioned and removed from the Property no later than 3 years after the
effective date of this First Amendment.
Lincoln Property Company
First Amendment to Development Agreement
c. Section 2 is amended to provide an additional Section 2.8: Due to the
uncertainty of when and how much additional electricity SRP will be able to provide to the
Property for operation of the proposed Data Center Expansion building, the Parties agree
construction of the Data Center Expansion building may be phased in accordance with a
phasing schedule that may be submitted by Developer and administratively reviewed and
approved by the City’s Development Services Director or his/her designee. If Developer
opts to submit a proposed phasing schedule and phased plans and elevations, such plans
and elevations shall demonstrate how the exterior quality of the phased east, west and
south elevations will be commensurate with the exterior quality of the east, west and south
elevations in the existing approved PDP.
d. Section 2.4 is amended to provide: Section 35-2214(4) of the City Code
("Baseline Study Section") details requirements for a property owner proposing to build
a data center related to studying and documenting ambient sound levels in the area
surrounding the proposed site of the new data center, and the Parties acknowledge
Developer has complied with this Baseline Study Section. Given the potential for future
changes in the immediate area that may affect ambient sound volumes, Developer shall
have the right in the future, but not the obligation, to again study and document the
baseline ambient sound levels in the area surrounding the Property and to submit the
results of this updated study to the City ("Updated Baseline Study"). The Updated
Baseline Study must be performed: consistent with the requirements of the Baseline
Study Section, except as it relates to any references to the timing of the study and the
submission of the study, and prior to commencing operation of, and issuance of a
certificate of occupancy for, the Data Center Expansion. Following submission to the
City's Zoning Administrator of an Updated Baseline Study, the City shall replace the
baseline sound study previously submitted by the Developer with the Updated Baseline
Study and shall use the Updated Baseline Study in applying the requirements of the
Data Center Sound Requirements as if the Updated Baseline Study had been the sound
study originally submitted in compliance with the Baseline Study Section. If Developer
elects pursuant to Section 2.7 above to construct and equip proposed Equipment Yards
1 and/or 2 prior to construction of the Data Center Expansion, then prior to obtaining
permits for a given phase(s) of the Equipment Yards and equipment, Developer shall
cause a qualified acoustical consultant to prepare and submit to the Zoning
Administrator a sound study(ies) for the given phase(s) prepared in compliance with the
City’s Data Center Sound Study Requirements.
e. Section 4 is amended to provide: Notices. Unless otherwise specifically
provided herein, or unless written notice of a change of address has been previously
given pursuant hereto, all notices, demands or other communication given hereunder
shall be in writing and shall be deemed to have been duly delivered upon (i) personal
delivery, (ii) delivery by a recognized overnight courier (e.g., FedEx, UPS) for next
business day delivery, or (iii) as of the fifth (5th) business day after mailing by United
States certified mail, postage prepaid, addressed as follows:
Lincoln Property Company
First Amendment to Development Agreement
To City:
Development Services Director
City of Chandler
Mail Stop 405
P.O. Box 4008
Chandler, AZ 85244-4008
With a copy to: Chandler City Attorney
City of Chandler
Mail Stop 602
P.O. Box 4008
Chandler, AZ 85244-4008
Phone: (480) 782-4640
To Developer: David Krumwiede
Senior Executive Vice President
Lincoln Property Company
3131 E. Camelback Road, #318
Phoenix AZ 85016
and
Ryan Sullivan
Lincoln Property Company
8111 Douglas Avenue, Suite 600
Dallas, TX 75225
With a copy to: Edwin C. Bull
Burch & Cracchiolo, P.A.
1850 N. Central Avenue, Suite 1700
Phoenix, AZ 85004
4.
Execution and Recording of this First Amendment. As is generally
described in Recital D above, the Parties agree that, if this First Amendment is approved
by the City’s City Council, then this First Amendment shall by no later than October 25,
2025 be fully executed by the Parties and deposited in trust with Title Company with the
Parties’ mutual instruction to Title Company that (i) this First Amendment shall not be
recorded unless and until Developer’s COE is completed whereby Developer is the fee
title owner of the Property, (ii) this First Amendment shall be recorded immediately
upon recordation of the deed conveying the Property to Developer and (iii) Developer’s
failure to complete its COE by October 30, 2025 whereby Developer does not become
the fee title owner of the Property shall render this First Amendment null and void
whereupon the Title Company shall mark the executed First Amendment “Void” and
immediately return it to the City.
5.
References to the Development Agreement. All references to the
Lincoln Property Company
First Amendment to Development Agreement
Development Agreement are hereby amended to refer to the Development Agreement
as amended by this First Amendment to Development Agreement. All other terms,
conditions and provisions of the Development Agreement are continued in full force and
effect and shall remain unaffected and unchanged except as specifically amended by
this First Amendment.
6.
Miscellaneous. It is the intent of the City and Developer that all of the terms
and provisions of the Development Agreement shall continue in full force and effect
except as expressly modified by this First Amendment. In the event of a conflict between
the terms of the Development Agreement and the terms of this First Amendment, the
terms of this First Amendment shall prevail. This First Amendment shall be governed
by the laws of the State of Arizona. Paragraph headings are inserted herein for
convenience only and shall not limit the content of any paragraph. This First Amendment
shall be construed in accordance with its plain meaning and shall not be strictly
construed against any of the Parties hereto. The provisions hereof shall be binding upon
and inure to the benefit of City, Developer, and their assigns. If Developer does not
complete the COE and become fee title owner of the Property as described in above
Recital E and section 4, this First Amendment shall be rendered null and void and
neither the City nor the Current Owner shall be bound by the provisions of this First
Amendment. This First Amendment may be executed in counterparts and each such
counterpart when taken together with all other counterparts shall be deemed one and
the same original document. All capitalized terms used but not otherwise defined herein
shall have the meanings ascribed to them in the Development Agreement.
7.
Effective Date. This First Amendment shall be effective upon its
recordation as provided in Section 4 above and not before.
Remainder of page left blank intentionally
IN WITNESS WHEREOF, the Parties hereto have entered into this First
Amendment to Development Agreement as of the day and year first above written.
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
Lincoln Property Company
DEVELOPER:
CITY OF CHANDLER, an Arizona
municipal corporation
By _
_ _______ _
Mayor Kevin Hartke
2500 West Frye Road Owner, LLC,
a Delaware limited liability company
By: 2500 West Frye Road Holdings, LP,
a Texas limited partnership
Its: Sole Member
By: Royal 2500 West Frye Road GP LLC,
a Delaware limited liability company
Its: General Partner
By: Royal MGMT LLC,
a Delaware limited liability company
Its: Manager /-=-
Qr
By: _____
_ ___ _
Name: David R. Krumwiede
Its: Authorized Signatory
First Amendment to Development Agreement
State of Arizona
County of FAA'.i(/4Y:?N
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of Lincoln Property Company LLC, a Texas limited
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(Seal)
NICOLE R DONNER
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MAAICQIIA COUNlY
COMMISSION# 659198
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Lincoln Property Company
First Amendment to Developer Agreement
Notary Public
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Development Agreement - Plan
Approved by City
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